Saturday 23 September 2017

Getting too cosy with your home insurer can be costly

Picture posed: Thinkstock
Picture posed: Thinkstock

John Cradden

If your current home insurance policy is with a bank or a building society and you live in an area not affected by floods or subsidence issues, switching could save you hundreds of euro on your cost of your annual cover, experts say.

The National Consumer Agency's recent report on switching behaviour suggests that home insurance sits somewhere in the middle in the ranking of products or services consumers are most likely to switch.

Brian McNelis, director of general services with the Irish Brokers Association, says there is probably a good bit of inertia among householders to switch their cover.

It's hard to know why exactly, he says, but "what we do know is that the majority of homes - around 60-65pc - are insured through banks or building societies. When you are insured with a bank or a building society, the tendency to move is not huge. There's a comfort there for some people".

From a cost competitiveness point of view, it's perhaps not surprising why banks or building societies might be more expensive. "The banks and building societies have one product, with one insurer," says Mr McNelis.

In addition, he says there is a danger that some older policies may be linked to the size of the original home loan rather than to the rebuilding costs. The rebuilding costs are usually much lower, and have fallen in recent years.

Jonathan Hehir of insurance brokers Coverinaclick.ie, says that simply switching can save you between 10pc and as much as 40pc on your premium.

Mr Hehir's firm did a small survey recently on price differentials that showed shopping around could get you cover for just €300 that might have cost up to €500 elsewhere "and without too much work involved", he said. "If you make a couple of calls, you will, without a doubt, save money on your home insurance."

According to the National Consumer Agency's current home insurance cost comparison survey on Consumerhelp.ie, the lowest quote for a three-bed bungalow in Midleton, Co Cork, with rebuilding costs of €200,000 and €50,000 contents cover was €279 compared to €700 for the most expensive - a €421 difference.

Mr Hehir adds there is currently strong competition in the home insurance market.

"We haven't had adverse weather events that have affected insurers that might have happened previously so, unlike the motor insurance market, the home insurance market is very competitive.

"People might not be seeing reductions in their premium, but they certainly shouldn't be seeing increases in it. If they are aware the area has been flooded before and are getting flood cover from their own insurance, definitely do not move because it will cause a lot of problems. For those people who aren't in flood areas, I would say ring around, you will save money all day long. It's a no-brainer."

Review your cover as you switch

Reviewing your cover regularly could save you nearly as much as switching. Most insurance products include cover for the cost of re-building a house in the event of damage or a fire and also of replacing your contents. 

These costs can change from year to year. For instance, it's been well-flagged that the costs of rebuilding have come down recently, which means that you reduce the amount of buildings cover accordingly - and cut your premium as a result.

The Society of Chartered Surveyors Ireland keeps an up-to-date rebuilding costs calculator and consumer guide on scsi.ie.

Other ways to cut your policy include having another insurance policy with the same company, fitting secure locks on doors and windows, installing an alarm, and fitting smoke detectors.

How to switch your home insurer

Step 1

Get your current home insurance documents and use it to check how much you are covered for rebuilding costs, contents cover and any other features, such as all-risks cover. Visit the Society of Chartered Surveyors website and use the online 'Rebuilding Costs Calculator' to see how much you should be insuring your buildings cover.

Step 2

Look at the National Consumer Agency's home insurance cost comparisons, which you can find on its website at Consumerhelp.ie, to give you an idea of how much you should be paying. Then visit a number of insurance websites - either brokers or insurers - and obtain some online quotes.

Step 3

Take your most competitive quote and ring your current insurer to ask if they can match it or better it. If not, ring the cheapest provider to arrange cover, which should take about half an hour.

Potential saving: 40% off

Total time: 90 mins

Irish Independent

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